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2006 06 14 IAB Minutes INVESTMENT ADVISORY BOARD Meeting June 14, 2006 CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 5:30 P.M. by Chairperson Deniel, followed by the Pledge of Allegiance. PRESENT: Board Members Moulin, Deniel , Olander, and Rassi OTHERS PRESENT: Board Members Egbert John Falconer, Finance Director, Vianka Orrantia, Secretary; Louise West, Accounting Manager, Tom Genovese, City Manager and Kathy Jenson, City Attorney ABSENT: II PUBLIC COMMENTS - None III CONFIRMATION OF AGENDA - (This is the time set aside for public comment on any matter not scheduled on the agenda.) IV CONSENT CALENDAR . A. Approval of Minutes of Meeting on May 10, 2006 for the Investment Advisory Board. Board Member Olander advised the Board on page 1, first sentence should read; hour of 5:35 P.M. by Vice Chairperman Chairman Olander, followed by the Pledge of Allegiance. MOTION -It was moved by Board Members Moulin/Olanderto approvethe Minutes of May 10, 2006 as amended. Motion carried unanimously. VI BUSINESS SESSION . . A. Transmittal of Treasury Report for April 2006 Mr. Falconer advised the Board that Staff is now including a Treasurer's commentary; this month's commentary reviews April's activity and also includes future activity. Staff will continue to include this commentary in all future agenda packets. Mr. Falconer advised the Board that there was a great deal of activity for the month of May and that this activity will be reflected in the May's Treasurer's Report. Investment Advisory Board Minutes June 14, 2006 Board Member Olander asked Staff if the City's figures were comparable in comparison to other cities around the valley. Mr. Falconer stated that he reviewed January's figures to do a comparison and found that La Quinta and the City of Palm Desert were at 4.08% yield to maturity, several ofthe other cities, such as Indian Wells, Rancho Mirage and the County were much lower. Board Member Olander asked Staff if the other cities used the six month T-BiII as their bench mark. Mr. Falconer replied that the City of Palm Desert uses LAIF as their bench mark but wasn't quite sure what the other cities use. Mr. Falconer stated that in comparison to other cities in the valley, the City of La Quinta's investment policy is more conservative, the other cities seem to be investing out further than the City of La Quinta which currently invests short-term. MOTION - It was moved by Board Members Moulin/Olander to approve, receive and file the Treasury Report for April 2006. Motion carried unanimously. B. Continued Consideration of Fiscal Year 2006/07 Investment Policies & Work Plan Items In response to Chairperson Deniel, Board Member Olander stated that the letter to the City Council was deferred until this month's meeting due to some confusion of the letter prepared by Chairperson Deniel. Chairperson Deniel clarified for the Board that the letter was drafted as a response to Councilman Osborne's concerns. Mr. Falconer advised the Board that this item was placed on the agenda for discussion by the Board under Item C and that it could be discussed at that time. Chairperson Deniel stated that the Board was satisfied with the policy as it exists, but th~re was a concern by Board Member Olander in regards to GSE's and possibly limiting or eliminating GSE's. Board Member Olander stated that the Board continue with the existing policy but continue to monitor GSE's very closely. Chairperson Deniel recommended that the Board take a vote that the Finance Director currently refrain from purchasing GSE's until furthernotice, and will review in six months to review the status of GSE's and the current GSE's held by the City, along with a monthly report tracking report prepared by the Treasurer. Board Member Moulin stated he felt that the Treasurer did need to report on a monthly basis. 2 Investment Advisory Board Minutes June 14, 2006 General discussion ensued by the Board regarding GSE's, Fannie Mae and Freddie Mac. The Treasurer stated that Fannie Mae (FNMA) investment was maturing in July and that he was not planning to reinvest until they have issued audited financial statements. Board Member Moulin motioned to move not to reinvest in Fannie Mae until Financial Statements have been released and at that time reevaluate Fannie Mae. City Attorney recommended to the Board that if they want a formal adopted action, that it be made part of the Investment Policy. It was agreed upon by the Board to make a recommendation to the Treasurer not to reinvest in Fannie Mae until Financial Statements are reviewed. Mr. Falconer clarified for the Board that there will be minimal changes to the policy and those changes will be the dates for this upcoming year. MOTION - It was moved by Board Members MoulinlRassi to forward the Fiscal 2006107 Investment Policy to the City Council. Motion carried by the following vote: Ayes-Board Members Moulin, Deniel, Olander and Rassi, Absent Board Member Egbert. C. Continued Consideration o.f Request for City Council to Release a Request for Proposal for Portfolio (RFP) for Investment Management Services Chairperson Deniel asked to address the response letter she drafted to Councilman Osborne. Board Member Olander asked the Board to clarify whether Councilman Osborne was representing the Councilor himself and whether a written response was necessary. Chairperson Deniel stated that the Council meeting minutes state that Councilman Osborne raised an issue and Council responded by suggesting he take the issue to the Investment Advisory Board, Councilman Osborne than came to the Investment Board with the issue. Mr. Falconer clarified for the Board that previous discussion pursued among the Board regarding the response letter and whether a written response was necessary. It was the consensus of the Board that a response was necessary. Another question arose from the Board whether the letter be addressed to Councilman Osborne or to the whole Council and the Board felt it was common courtesy to address the letter to the entire Council. Board Member Moulin asked Staff if the City Council would have to change the ordinance in order to move forward with RFP. City Attorney Jenson replied yes. 3 Investment Advisory Board Minutes June 14, 2006 Mr. Falconer stated that at the previous board meeting Staff suggested that the Board bring forward the work plan for the Fiscal Year 2006/07, the number one topic in the work plan would be the portfolio manager. Staff is planning to bring this to the July Investment Board meeting and based on the input from the Board this will be incorporated into the work plan and it will be presented to the Council the second meeting on the 18th of July. The Board will be asking Council to consider the release of the RFP for the portfolio manager and than would ask the city attorney to draft language for allowing for the portfolio manager. Board Member Moulin asked Staff if it was possible to change the ordinance without approving the RFP, the position the Board would like to take is to get the authority in place, so if Council agrees they do not have to change the ordinance. Mr. Falconer stated that the ground work for the RFP has already been placed in the investment policy and the next step is the change to the ordinance, which would require Council action. If the Board chose to go in this direction the next scheduled Council meeting is on July 5th or if the Board decided to go with the normal course of the work plan the scheduled date is July 18th. Chairperson Deniel expressed her concern regarding the ordinance if placed in the work plan. The Board continued general discussion regarding the implementation of the use of a portfolio manager, the change to the ordinance and the responsibility of the Treasurer. The Board than proceeded to discuss the draft letter to Councilmember Osborne and the City Council and whether to include in the 2006/07 Investment Advisory Board work plan. It was agreed by the Board to have the Treasurer finalize the draft with Chairperson Deniel and distribute to the City Council. MOTION - It was moved by Board Members Olander/Moulin to place the Request for City Council to Release Request for Prorosal for Portfolio (RFP) for Investment Management Services at the July 1 i 2006 agenda as part of the 2006/07 Work Plan. Motion carried unanimously. VII CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - May 2006 Noted and Filed B . Pooled Money Investment Board Reports - February 2006 Noted and Filed 4 Investment Advisory Board Minutes June 14, 2006 VIII BOARD MEMBER ITEMS Board Member Hassi attended the CMT A Conference and was able to speak to at least twenty investment brokers and if the RFP is released for a portfolio manager these brokers could possibly be considered. IX Adjournment MOTION -It was moved by Board Members Moulin/Rassi to adjourn the meeting at 7:00 p.m. Motion carried unanimously; ~ab/;. ,-A .A. ~ /I~/ ~~- Vianka Orrantia, . Secretary / 5